Angie Petkovic, founder of Apt Marketing & PR, on how discounting can increase your revenue – without devaluing your brand
As many as 40% of consumers are said to search for and redeem vouchers and discounts before they purchase a product, meaning the bargain-hunter market is a big one.
However, the risk of offering discounts is that it will simply devalue your service offering, without building loyalty, or delivering increased long-term spend.
How do you balance the pro of attracting this deal-hungry target market, with the potential con of being seen as devaluing your brand?
Offering a discount is not in itself a bad thing: the art is in mixing different types of discounts and understanding the customer behaviour that is likely to derive from it. Most importantly, any discounts you run should be planned well in advance, with a clear policy and stringent terms and conditions in place – to ensure you don’t cheapen your offering.
There are a number of different discounts you can consider:
Sales – Link sales to key times of the spending season or to shift stock you are discontinuing. Sales are traditionally a mainstay of the retail market, but can be superb at delivering bookings for traditionally quiet months or freeing up space on the shelves. Examples of this include percentage or monetary value discounts on retail stock, or percentage discounts on all or a range of treatments.
Value discounts – Involving a price or percentage offer across everything, these are the weakest form of discounting, as they simply offer a reduction in the core price and are most likely to devalue your offering. If you do want to consider using them, they should be short-term and if possible, linked to a specific type of behaviour. For example rewarding loyal customers with a 10% discount during a particular week.
Introductory offers – Contrary to common belief, introductory offers shouldn’t be used to encourage new people to visit your spa. If you gain a new customer with a lower than normal price, you’ll be stuck with this as an expectation for all their future visits. Instead, introductory offers should be used to showcase and sell your business.
From a trial period price for a new spa treatment, experience or package, to a special offer on a new retail product in the shop, introductory offers should help create a buzz and give you an excuse to contact past customers. They should be available for a limited time only and on a first-come, first-serve basis, to make sure people react quickly and to maximise your short-term income.
Packages/Added Value – This is by far the strongest “discount” you can apply to your offering and is in fact not really a discount at all. By packaging treatments together in a spa day or offering a second product at half price when clients buy the first one, you’re encouraging them to spend more, rather than less, with you. Granted, your margin on each treatment or product will be slightly smaller, but overall, your turnover and profitability will be up.
Topical Offerings – Working on the basis that you run all your discounts and offers in relation to key events such as Valentine’s Day or Mother’s Day, this is a debatable option. The problem is that these events are peak times anyway, so you in fact risk reducing your revenue. Unless a nearby business is killing your enquiries by offering these discounts, they’re one of my least favourite options.
Training Discounts – An offer that should only be used within the spa premises, it gives people the opportunity to experience cut-price treatments as part of your staff training, while giving staff a chance to practice. Since it’s inherently clear that this discount is short-term and relates to training, there is no problem with a perceived devaluation of your offering.
On-the-day deals/last minute cancellations – As with training, you can offer last-minute deals to those already in the spa or in the case of cancellations at short notice, via social media – to fill treatment vacancies and increase your turnover. A word of caution, however, don’t offer these discounted appointments first thing in the morning; you will irritate those who booked in advance and paid full price.
Regardless of the discount or offer option you choose, make sure you put cast iron terms and conditions in place, that make it clear when the offer is available and how long for and that outlines any limitations or exclusions it may include – to keep you and your brand protected.
The aim of discounts is to encourage more people through the door, whether they are new customers or returning ones – using incentives to increase the number of visits and ideally also the value per visit. Ultimately, discounts should help you make more money, not less, so make sure you’re measuring the cost of running them versus the results they deliver.
Angie Petkovic is the managing director of Apt PR, a UK marketing and PR agency whose clients include spas and other business across the beauty, hospitality, leisure and tourism industries